Re-mortgage on property you part-own?

calgary bound

Hello,

Myself and my husband part own a house with my mother (50% us, 50% her).

We bought it outright for cash, we would like to get a mortgage on it for approx 20% of the value of the house to modify it to our needs.

We both work but she is a pensioner, does anyone know if it is possible:

A) to get a mortgage on a property you already own

B) to get one when you only own a .5 stake in the property, I understand all 3 names will have to go on the mortgage deed to match the title deed, which is fine.

Thanks in advance :)

AnRothar

We bought it outright for cash,

Who is we?

All 3 parties or did you buy a share of your mother's house?

How is the property owned.

Tenants in common or joint tenants.

This is the legal term which defines how the property is owned.

When the transaction was executed did each party get separate legal advice?

This may have implications when your mother passes away.

Are there other siblings?

Would you need to raise funds to buy her share?

she is a pensioner

The "family home" has certain protections in Irish law.

A mortgage is a loan secured (charge) against a property.

If things go wrong the lender will want to be sure that their interest (charge) can be realized.

We both work but she is a pensioner

You say you need a mortgage of 20%.

Is this 20% of the current value or 20% of your share?

The former is equivalent to 40% of your interest in the property.

You do not mention your current age or family situation (kids).

This may impact your borrowing capacity.

You probably will need a good broker. And possibly legal advice.

Would a personal loan be an option?

Peregrinus

If the loan proceeds are to be spent modifying the house, then the benefit of the loan accrues to all three owners. So in principle the bank should be fine with extending a loan to all three owners jointly, secured with a mortgage over the whole property granted by all three owners jointly.

But . . .

One of the borrowers/mortgagors is an pensioner with (presumably) limited income. The bank will need to be satisfied that the income of the other two can comfortably service the loan. And if they are, they may be happy with mortgage insurance on the lives of just the two earners, rather than all three borrowers.

But that's not all. If, due to unemployment, accident, financial disaster or whatever the borrowers could not service the loan, the bank wants to be able to enforce its security. And they know it would be next to impossible to do this by evicting an elderly widow. But it will be absolutely impossible to do it without evicting the elderly widow.

So this, I think, is going to be the bank's problem; it will be hard to enforce their security. And what use is a security that you can't enforce?

The bank might go for this if they are satisfied that there is next to no chance that they would have to enforce — if the loan is so small, and the earnings of each of you so large, that it is hard to see you being unable to service the loan, even if one of you loses their job. But they're going to suck their teeth very hard before the make a decision about this. And they are likely to charge a premium interest rate, reflecting the additional risk in this arrangement. And they will want your mother to be independently advised; she risks losing her home if you fail to pay the loan on schedule.

I'd definitely go through a mortgage broker for this one; a good broker will know which bank to pitch this to, and how to present it.